When you decide to sell your home, choosing the right real estate agent is one of the essential parts of the process. However, you may take all the precautions and still wind up with less than an adequate agent. You come to the conclusion that you no longer want them, and you are willing to fire them.
You may say, "my home, my decision," "I changed my mind." That is true but not so fast. There is the listing agreement, a contract to protect you, the seller, and the agents presenting you. Let's learn a bit about the listing agreement first.
What is a listing agreement?
A listing agreement is a contract between two parties, the sellers and real estate brokerage.
Note that the agreement is between the sellers and the "Brokerage," NOT the agent. Here are some of the key terms used in this article to make it easier to follow.
"Real estate agents and agents" refer to the real estate professional that will be doing most of the work to sell your home.
"A brokerage" refers to a corporation that hires a real estate agent. The listing agreement is, in reality, is between you and the brokerage.
"Sellers" refer to the homeowners that sign an agreement with a brokerage to market and sell their home on their behalf.
"Agreement or contract" refers to the bilateral contract between the seller and brokerage.
The contract is a legally binding agreement that gives the real estate agents the right to market and sell your home. In a nutshell, it means the contract comes with caveats, and as a seller, you cannot simply walk away and fire your agent. The listing agreement contains terms to protect home sellers; however, the details are beyond the scope of this article. Similarly, the contract also protects the real estate agents.
The most common listing agreement type in the industry
As you imagine, there is a variety of listing agreements. For this article, we will focus on the most common contract, "the Exclusive Right-To-Sell Listing." Industry experts believe that the Exclusive Right-To-Sell comprises 99% of the listing agreements in the market.
What is an Exclusive Right to Sell Listing Agreement?
Exclusive Right to Sell Listing is a legally binding contract that provides the real estate agents (brokerage) total control over the selling process. Including but not limited to:
The rights to market the home
List the house on MLS
Negotiate on your behalf
And receive the commission once the deal is closed
Firing your Real Estate Agents
If you are under an exclusive Right-To-Sell Listing contract, as most sellers are, you cannot simply fire your real estate agents. Both sides of the agreement, seller and agents, need to agree to terminate and release each other from the contract. The reason is that the agreement is to protect the seller and agents since both sides have something to lose.
The best scenario would be to work out the kinks with the agent and continue. However, if you have concluded that it is no longer feasible or perhaps harmful to work with the agent, you may take the necessary steps to terminate the agreement.
Valid reasons to let go of your agent
Lack of industry experience
The experience of selling and buying process and, especially, negotiation are essential to get the top dollar for the client. In addition, to provide an overall seamless and pleasant experience for the sellers. Experience is not taught in the school, and it comes with the number of transactions an agent has through many years. It is crucial to make sure you are working with an experienced agent; otherwise, it will cost you dearly.
Lack of communication
Sellers hire real estate agents for effective communication, which is vital for the many A to Z steps of selling a home. If you know there is a communication issue with you, as a seller, and others - you have a valid reason to part away from your agents.
Real estate agents carry out most of the daily tasks of selling your home; however, you, the seller, make the final decisions. For practical decision-making, to get the most for your home, you and your agent must be fully compatible. You may realize you are incompatible with your agent, which warrants the breaking of the contract. Unfortunately, it isn't easy to discover if you are compatible with the agents before you hire them. My best advice is to ask as many questions during the agent interview; you may realize the incompatibility before signing the contract.
Lack of Marketing
In my opinion, marketing ought to be on top of the list of sellers' dissatisfaction. However, marketing is not on top of the mind until a few months have passed, and the possibility of selling your home to the highest potential value is fading away. The sellers' blind trust of agents to do their marketing to a high standard means they leave a lot of money on the table. Here are some of the marketing that sellers should ask and follow up during the selling process.
Lack of professionalism
The cornerstone of the real estate industry is professionalism. The word "professionalism" is the most overused, yet it is the most ignored quality in the industry. Here is some unprofessional behaviour that may prompt the seller to fire their agents:
In an ideal world, we all want to avoid working with unprofessional individuals. The best way is to do your homework and interview your potential agents carefully; avoid hiring a recently licenced friend or family member for your own sake.
The agents view: looking at both sides of the issue
To be fair, it is not always the agents' fault. It is more common than you might know; top agents do walking away from unreasonable sellers. Some agents try to work with such sellers, but it is not easy and, on occasions, not healthy.
The most common source of friction is home pricing or the gap between the agents' estimate of the actual value and the sellers' price. Overpricing a home is typically the reason most homes do not sell. Overlooking the real problem, sellers may begin pointing the finger at their agents.
The second on the list is the know-it-all clients. Although some experienced agents can overcome the challenge, it is a common source of dispute. Such sellers may ask for ineffective marketing or selling strategies that professional agents will avoid. The bottom line is if you have hired the top experts in the field, give them the elbow room to do their work.
Finally, it could be a simple case of miscommunication. The seller may expect and ask for a particular commitment; however, the agents may not know it. The agents may do certain things that are not pleasing to the seller. So a simple communication from the seller may give the agents a chance to remedy the issue.
Terminating your listing agreement before it expires
All said and done, and you decide to fire your real estate agent and terminate the listing agreement. Keep in mind; most people, including agents, do not want aggravation, and they hope to resolve the matter as much you want. You should communicate your observation and unhappiness with the service and request to be released from the contract. At this point, your real estate agent may agree or dismiss the idea of early termination; next, we look at both scenarios.
Your real estate agent agrees to early termination
If your agent agrees with the early termination, that means both sides release each other from the agreement. As with any legal matters, make sure you have everything on the paper. However, the contract may enlist several expenses that the agents typically incur, for example, professional photography, advertising, and videography costs. These expenses are added before signing the agreement, and additional costs cannot be added later. You may be responsible for reimbursing your agent for such expenses.
Your real estate agent disagrees with early termination
If your real estate agent disagreed with early termination, it is not over yet. Remember, the agreement is between you and the brokerage; hence you may take your case to the agent's broker (brokerage).
Meeting with the broker
Do not storm into the brokerage demanding to be released from the contract. Instead, prepare a list of items that concern you and why you are unhappy with the agent or perhaps brokerage itself.
Most brokerage, notably smaller community-based ones, are wary of their name brand in the community. And they do not want to chain a client to a contract if the client is unhappy. These are all good reasons to release you from the listing agreement. Note that you may be responsible for reimbursing expenses and termination fees based on the contract.
On the other hand, the real estate agents may agree to release you from the contract with a condition. The conditional release will prevent you from re-listing your home with another brokerage for the remaining period of the original contract.
Protection Period for the agent
For the duration of this article, we have focused on the Exclusive Right-To-Sell Listing Agreement. Often, this agreement will have The Safety Protection Clause. The Safty Protection Clause qualifies the real estate agent to commission even after the listing agreement is cancelled or expired.
If you did not have any showings during the original listing, you might not worry about it. However, suppose your listing agent had brought a buyer for showing, and that buyer ultimately buys your home. In that case, your real estate agent may have a claim for commission - regardless of the agreement being cancelled or expired.
The Protection Period Clause is included in the listing agreement to protect the interest of the agents. One possible scenario is that sellers may get to know the potential buyers and organize a side deal once the seller terminates the contract. The Protection Period Clause is to discourage such side deals and hence future legal issues. The seller may end up paying the sales commission and hefty legal fees as well.
Wait until the contract expires
You can avoid many of the issues just by waiting until the contract expires. It is an option worth considering. However, that depends on how long is left from the expiry date, how urgent it is to sell your home, real estate market conditions, and so on.
It would be best if you tried to avoid hiring the wrong agent to begin with - here are some quick guild lines. Focus on the local experts, do your homework to get to know the agents, interview each agent carefully, and read the agreement and consult with your lawyer.
Regardless of how much you try, things can go wrong. If you need to fire your agent, resort to communication with the agent and the broker to a peaceful release. Avoid breaching your contract; legal battles are costly both financially and mentally.
Good luck, and thank you for reading my article.
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Terminating listing agreement and firing your real estate agent, why and how?
The above Real Estate article was provided by David Khosravi, a leader in his field in North York, Willowdale Real Estate, Reach out to David via email: email@example.com or by phone: 416.990.2424